At our property seminars in London, we often talk about buying a property at auction. House auctions are a great place to find bargain buy-to-let properties for sale, and to boost your ROI in the process; but it’s not a wise idea to start bidding without doing your homework first.
With that in mind, here’s a checklist of things you should consider before you purchase a house or apartment at a property auction.
Buying a House at Auction – Things to Check
Check the leasehold situation. There’s nothing wrong with buying a leasehold property at auction; but because it’s usually more complex than buying a freehold, you’ll need to thoroughly check all the terms and conditions. For example, how many years are left on the lease? If it’s under 80, you’ll want to extend it (which takes time and money), as the property will decrease in value otherwise.
What are the service charges? Likewise, leasehold properties usually come with service charges, ranging from the reasonable to the ludicrously expensive. If the apartment is an absolute bargain and you’re not sure why, it could be because the annual service charges are eye-wateringly pricey – make sure you check before buying.
Get the legal pack. We recommend getting a copy of the legal pack before you view the property, to make sure there are no serious legal issues associated with the house in question. If you’re struggling to understand it, hire a legal expert to help you.
Are the extensions etc. legal? Many houses these days feature loft extensions or garage conversions. However, not all of them were approved, and some were carried out without planning permission. Ask to see all the paperwork, to ensure that you won’t encounter any associated problems further down the line.
View the property in person. It’s always advisable to visit the property in person before you bid, as some problems won’t be apparent in photos. For example, you may notice when you get there that the roof needs replacing, which costs around £10,000 upwards to fix. The boiler might be old, which will cost another few thousand to resolve. In short, there are several issues that you’ll only be able to detect if you peruse the property properly.
When You’re About to Bid…
Ask yourself the following questions:
Is it too good a deal? If the flat or house seems incredibly cheap, there’s obviously a reason why. It may well be that it just needs some cosmetic updating, which isn’t a problem. But if there are major structural issues or legal problems associated with the property, it probably isn’t worth the hassle involved.
What’s the area like? How is the property market performing in the local area? Are house prices rising? Is tenant demand high? What’s the average rental yield? You need to know all this information before buying.
The Buy2Let Shop
If you’re thinking of buying a property at auction, talk to The Buy2Let Shop. We’ll help you identify the best houses to bid on, and offer tips on how to secure them at a great price. For more information, visit The Buy2Let Shop website today.